Healthcare Alert

After SGR Medical Economics

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After the SGR it is increasing important to recognize that payments, while more stable than under the old methodology, are going to be driven by a series of new calculus � some local some national. Practices need to be able to understand their cost structures to know when and how to work on contract terms � when is it better to negotiate and when to walk away. Medical Economics has an article to help lead the beginning of the discussions, Marcum LLP can help with detailed analysis, too.

For Wanda Filer, MD, FAAFP, president-elect of the American Academy of Family Physicians (AAFP), the end of SGR means physicians no longer have to live under the constant threat of cuts in Medicare reimbursements.

�It was hard for practices because they didn�t know what the payment structure was going to look like,� she says. �It really stifled a lot of innovation
opportunities in practices. You didn�t know what the revenue stream was going to be and that�s really scary, especially for many of the smaller practices.�

Robert Doherty, senior vice president of governmental affairs and public policy for the American College of Physicians (ACP), also considers this to be good news, saying he has �never seen medicine more unified on an issue than the end of SGR.�

However, while many physicians breathed a sigh of relief, they also have many questions about how these changes will affect their practices. Small practices,
in particular, are going to face challenges succeeding under these new payment models, and may be required to collaborate to make strides.

MACRA: Some details In a May 1 conference at ACP�s annual meeting in Boston, Doherty reviewed some of the details about the legislation replacing SGR, known as the
Medicare Reauthorization and CHIP Renewal Act, or MACRA. He said it creates a four-and-a-half-year timetable during which physicians are guaranteed
0.5% increases in their fee-for-service payments.

However, in 2019, it creates a �fork in the road� at which physicians must choose a path that they think is best for their practice: either the Merit-based Incentive Payment System (MIPS) or some form of alternative payment model. Their decisions need not be permanent;
they can change each year.

Doherty described MIPS as a fee-for-service plan that has an increasing financial risk for quality. Physicians will be measured based on clinical outcomes,
meaningful use of electronic health records, resource use (efficiency) and practice improvement. Increased payments will go to the top scorers.

For physicians who want to move more into systems of care, the alternative payment models may be more appealing, he said. Physicians will be guaranteed
5% fee-for-service increases over six years, but they will be paid according to performance. There is risk�they can earn more but they can also be
paid less if they don�t deliver savings, Doherty says.

One exception to this scenario is the patient-centered medical home (PCMH) model, in which a physician does not have to take on financial risk, but does
have to show that he or she can improve quality without increasing costs, or can lower costs without losing quality.

Doherty dismissed rumors that this law penalizes doctors who don�t participate in Maintenance of Certification (MOC). The government can let physicians
count their MOC work toward their MIPS practice improvement component, but it is only one option to meet that requirement.

�We supported that because it is a hassle reduction,� he says. �If you have to do MOC whether you like it or not and you are reporting it to your certifying
board, we felt it should help count to qualify you for the MIPS program.�

Reaction to the new law Filer says the .5% reimbursement increases in the first few years, while small, are preferable to the 21% cuts that were looming, especially since
about one in four patients a typical family practitioner sees are Medicare beneficiaries. (In some practices it is as high as 60 %.)

Now that the payment structure is stabilized, she says, AAFP looks forward to the chance to attain payment differentials through advance practice models.
She is glad the law includes ways to help small practices transition to a PCMH and start earning value payments for care that doesn�t necessarily require
face-to-face visits.

�There is an alignment of many projects that include support for small practices to do that hard work of transformation and allow them to get paid for
the services they are doing, and get some of our members off that proverbial hamster wheel of being paid for volume and let them instead coordinate
care for their patients,� she says.

Christian Shalgian, director of advocacy and public policy for the American College of Surgeons (ACS),
notes that the initial legislation ending SGR included a 10-year payment freeze, so the .5% increases for the first few years is better. He is skeptical,
however, that it will be enough to cover surgeons� rising expenses. �As we move into new alternative payment models, doctors could do better,� he says.

For surgeons, those new models could include bundled payments. Shalgian notes that surgeons have worked with something similar for years, with global payments
for surgery.
�There is enough flexibility in the new law allowing various options to be created under this, and not restrict surgeons to one or two options,� he
says.

What lies ahead Expert agree that much work lies ahead, however, as the details of MACRA are sorted out.

Shari Erickson, MPH, ACP�s vice president of governmental affairs and medical practice, praises MACRA but says the rule-making that will take place over
the next several years will be critical.
�I celebrated for about five minutes then I started thinking about all the work that is ahead of us,� she says.

For example, an area that will need to be addressed is the metrics that will be used to assess quality and resource use in the MIPS option.

�They likely will be building on the existing measures that are in the PQRS [Physician Quality Reporting System], value-based modifier, and meaningful use program, but they also need to take a closer
look at ensuring that those measures are the right measures,� she says.

Other questions to be addressed: how will physician input be factored into resource use decision-making, as required by the law? How will feedback be used
in the rule-making process? How will MIPS composite scores be calculated?

There are just as many questions about the criteria that will be required to be part of an advanced practice model, she says. There are parameters in the
legislation covering these topics but the details need to be laid out. �We want to make sure it is done in a way that reduces the burden on all involved,�
Erickson says.

ACP will establish a priority list and a timeline for how it can influence such decisions, she says. She adds that ACP has a lot of work ahead educating
its members as they decide which path their practices will take.

Filer says that AAFP�s next goals include seeing the Children�s Health Insurance Program (CHIP) reauthorization extended beyond the two years included
as part of MACRA. CHIP is important to family physicians because they care for about 70% of adolescents in the U.S., and CHIP offers coverage to age
18.

Filer says AAFP also would like to see the teaching health centers program be continued beyond the two years MACRA provides. She says this program has
been an innovative and successful teaching model that benefited primary care in particular by creating new residency spots. About 100 trainees were
expected to participate but more than 700 actually did.

�It has been a great workforce opportunity and there has been a huge interest in it,� she says.

Shalgian says ACS will continue to lobby as MACRA is implemented. �In a bill this size, there always needs to be improvements,� he says. �We are working
closely with CMS [the Center for Medicare & Medicaid Services] as to how they implement various sections of the new law. We have some important
hurdles to still go to make sure this is implemented correctly.�

Winners and losers Did any part of healthcare �lose� in MACRA�s passage?

Filer says the only potential losers are physicians who want to hold tight to fee-for- service or who are having quality problems, because they will be
at risk for reduced payment over the next few years. �But my hope is that this will lift all boats,� she says.

�There definitely are incentives to encourage physicians to make some decisions about whether pursing advanced practice models will be beneficial to them,�
she adds.

About one-third of AAFP�s members have transitioned to a PCMH. She says it is hard work, and some early adopters have not yet seen much return from their
investments in time and money. However, she believes the new law should help.

�(Becoming a PCMH) is a bold step forward. It�s good for their practice, good for their patients, and now they will hopefully get payments for it so they
can sustain those changes,� Filer says.

Nitin Damle, MD, FACP, ACP�s president-elect, thinks MACRA opens many new opportunities in a secure environment, and he hopes the result will be better
quality and lower costs. However, he notes that small practices may have difficulty going down either path. The accountable care path is particularly
hard for practices that have too few lives to cover losses and distribute risk.

�Smaller practices are going to have to collaborate. They are going to have to get together with other practices in their community along with their local
hospitals and create a network. They do not all have to be under the same bricks-and-mortar structure but they do have to have some collateral relationship
in order to be able to participate in ACOs,� he says.

The Merit-based Incentive Payment System (MIPS) will evaluate physicians on a variety of criteria, including clinical quality. One option for physicians to receive credit is through practice
assessments related to maintenance of certification (MOC), according to the American College of Physicians (ACP).

Does that mean that MOC, a controversial program that many physicians oppose, is required while participating in MIPS if physicians do not want to have
their reimbursement penalized.

Many details need to be worked out about the MIPS program during rulemaking, but MOC will not be required as part of MIPS, says Robert Doherty, senior
vice president of governmental affairs and public policy for the ACP. Instead, it may become one of many possible methods physicians can use to complete
this section of the MIPS process.

�ACP supported allowing physicians who are participating in MOC to have it count as an option for this subcategory,� Doherty said during a news conference
at the ACP annual convention. �If physicians are already pursuing these activities for MOC purposes, then ACP believe they should receive credit for
them for this purpose as well.�

MACRA: Two roads to quality Starting in 2019, and each year after that, physicians who receive Medicare reimbursements will have to choose one of two paths:
Merit-based Incentive Payment System (MIPS)

Under this program, traditional fee-for-service payments will be adjusted, with either bonuses or penalties, depending on a physician�s score on a
new reporting program.

The new reporting program will replace and combine aspects of the Physician Quality Reporting System (PQRS), Meaningful Use, and the value-based modifier.

Physicians will receive a score between 0 and 100 based on four areas: Clinical quality, meaningful use, resource use and practice improvement. The
details of each of these areas are yet to be worked out during the rulemaking process.

Scoring weights in these areas may be adjusted to account for a physicians ability to successfully report on each area. Physicians will receive credit
for improvement from year to year.

Physicians with the best MIPS scores can potentially earn �exceptional performance� bonuses.

Alternative Payment Model (APM)

Physicians who choose APM will receive a 5% annual bonus to fee-for-service payments if they can prove they receive substantial revenue through an
APM.

Substantial revenue can be defined in two ways. The first option is, by 2019-2020, 25% of Medicare payments must be attributable to the APM, increasing
to 50% in 2021. The second option is, starting in 2021, 50% of combined payments from Medicare and other payers must be attributable to the APM.

APMs will have their own payment rules, depending on the particulars of the payment arrangement of the organization.

Options for APM include use of a shared savings/financial risk arrangements, such as accountable care organizations or use of bundled payments.

Use of the patient-centered medical home (PCMH) model can qualify if the PCMH is shown to improve quality without lowering costs, or lowers costs without
harming care quality.

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